Colorado Clean-Energy Plan Looms as Issue for FERC Pick

When Ron Binz was Colorado’s top
utility regulator, he championed a deal that critics said helped
the state’s largest power company convert coal plants to natural
gas at consumers’ expense.

The project was a big component of then-Governor Bill Ritter’s environmental agenda and was approved in 2010 by
Colorado lawmakers.

“The eagle has landed,” Binz wrote in an e-mail to power
company and state officials announcing that a deal had been
struck that allowed it to go forward.

The project, and Binz’s role, won plaudits from
environmentalists who say it has cut emissions linked to climate
change. Critics, especially from the coal industry, cite it as
evidence of an activist regulator and are trying to block his
nomination to lead the U.S. Federal Energy Regulatory
Commission. The Senate Energy and Natural Resources Committee is
scheduled to hold a hearing on the nomination tomorrow.

If confirmed, Binz, 64, would take the helm of an agency
that in 2005 gained congressional authority to broaden its
enforcement powers. Over the past decade it has been transformed
from a sleepy regulator of the U.S. electric grid to an
enforcement authority. This year alone, FERC has sought more
than $900 million in penalties and settlements from banks
including Barclays Plc (BARC) of London and New York-based JPMorgan
Chase & Co. (JPM), which were accused of gaming energy markets.

More Scrutiny

“FERC’s more out front, FERC’s under more scrutiny -- it
works both ways,” Curt Hebert, a chairman of the commission in
2001, said by telephone. President Bill Clinton nominated Hebert
in 1997.

Since President Barack Obama named Binz for FERC chairman
on June 27, he has been the object of scorn from free-market
advocates and the coal industry, who say he played a big role in
passing Colorado’s 2010 Clean Air-Clean Jobs Act.

“Just like in Colorado under Commissioner Binz’s watch,
electricity prices will increase if he is confirmed as FERC
chairman, which will be a hidden tax on your constituents,” 14
organizations including the American Energy Alliance, National
Taxpayers Union and Americans for Prosperity, a small-government
group backed by billionaire industrialists David and Charles Koch, said today in a letter to the Senate committee.

‘Smooth Transition’

Binz’s supporters say that case is overstated.

As chairman of the state utility commission, “he oversaw
regulations for a smooth transition to a more efficient energy
system with more diverse energy technologies, while minimizing
rate impacts to consumers,” a coalition of clean-energy groups
and companies including SunEdison Inc. (SUNE) of St. Peters, Missouri,
and EnerNOC Inc. (ENOC) of Boston, said in a Sept. 13 letter to the
senators.

Ritter, a Democrat and one of Binz’s staunchest allies,
described him as a talented regulator who’s being pilloried for
the clean-energy policies of the governor’s administration from
2007 to 2011.

“I think that folks who didn’t like what happened in that
four-year period, they’re continuing to fight those battles,”
Ritter said by telephone.

Binz is a former consumer advocate who now runs his own
Denver-based company, Public Policy Consulting, which
specializes in energy and telecommunications. He declined an
interview request. He’s well-known in the energy-regulatory
community in Washington, and many of his peers consider him a
scholar on issues affecting the industry.

Wellinghoff’s View

“I think he would make a very capable and competent
chairman,” current FERC Chairman Jon Wellinghoff said in a
telephone interview.

Anticipating controversy over his nomination, the Green
Tech Action Fund, a San Francisco nonprofit group that backs
clean-energy technology, hired a Washington public-relations
firm to support Binz.

After the Wall Street Journal attacked him as “the most
important and radical Obama nominee you’ve never heard of” in a
July 30 editorial, 12 former FERC commissioners from both
parties rose to his defense.

“Mr. Binz has an impressive 34-year career in energy
policy,” they wrote in rebuttal, also published in the Journal.
“If the Senate confirms him, we think he will be a fair and
impartial judge and further the public interest within the
FERC’s authority.”

Customers Charged

Binz’s detractors include the Denver-based Independence
Institute and the Washington-based Competitive Enterprise
Institute, both describe themselves as advocates for limited
government. They say he guaranteed Minneapolis-based Xcel Energy
Inc. (XEL), Colorado’s biggest utility, a 10.5 percent return while
charging its customers for the coal-to-gas conversion project.
The deal was intended as an incentive for converting plants to
natural gas, which when burned to produce electricity emits a
fraction of the greenhouse gases tied to coal.

“He’s guaranteeing a rate-of-return to the power company
he’s supposed to be in judgment of,” Amy Oliver Cooke, director
of the Energy Policy Center at the Independence Institute, said
by telephone. “Ron Binz should not be head of the U.S. Federal
Energy Regulatory Commission.”

The average rate of return regulators awarded utilities for
their construction projects in 2010 was 10.3 percent, according
to data provided by the Edison Electric Institute, a Washington-based industry group.

Disqualification Denied

A Denver District Court in January 2011 denied a request
from the Intermountain Rural Electric Association, a Sedalia,
Colorado-based power cooperative that wanted Binz disqualified
from proceedings related to the pollution-reduction legislation.

A separate challenge to Binz’s role in the creation of the
law “is still very much alive and kicking,” Stuart Sanderson,
president of the Colorado Mining Association, said by telephone.

In February a judge from Denver District Court issued a
stay in that proceeding, led by the Associated Governments of
Northwest Colorado and the mining group, pending the outcome of
a related case.

“There has been no court order exonerating Binz for his
conduct in connection with the negotiations leading up to the
Clean Air-Clean Jobs Act,” Sanderson said.

First Appointment

Binz, who led the Colorado Public Utilities Commission from
2007 to 2011, was Ritter’s first appointment as governor and the
two have worked together beyond their public-service careers.
Since 2011, Binz has been a senior policy adviser at Colorado
State University’s Center for the New Energy Economy, which
Ritter now directs.

Binz is transparent about his background. His website
includes an 11-page resume detailing his employment history,
publications and congressional testimony. Binz led the Colorado
Office of Consumer Counsel from 1984 to 1995 and was the
chairman of the National Association of Regulatory Utility
Commissioners’ climate-policy task force from 2010 to 2011.

Early in his career, he taught mathematics at the
University of Colorado, and he has been a managing partner in a
Loveland, Colorado, winery. Binz gave $3,500 to Obama’s 2012
presidential campaign, according to the Center for Responsive
Politics, a Washington-based campaign finance watchdog group.

Last year Binz was the lead author of a report that
encouraged state regulators to develop new ways to manage risk
as utilities deal with issues including aging power plants, the
switch from coal to natural gas and competition, environmental
rules and a sluggish economy.

‘Straight Shooter’

“Ron Binz is a straight shooter,” Mindy Lubber, president
of Ceres, the Boston-based nonprofit organization that published
the report, said by telephone. Ceres, which advocates for
businesses and investors to promote sustainability, chose Binz
to lead the study because of broad knowledge of energy issues,
she said. “Investors are not looking for us to put out reports
talking about the beauty of solar energy.”

Other supporters, such as John Nielsen, energy program
director for Western Resource Advocates, a Boulder-based
environmental group, describe Binz as a “champion of consumer
issues.”

The Colorado Mining Association, which obtained from public
records and provided the “eagle has landed” e-mail, says it
disagrees. The group in 2011 estimated that the coal-to-gas
conversion project that the Binz-led Public Utilities Commission
approved had cost Colorado consumers more than $1.3 billion. The
commission “rejected lower cost alternatives,” including
retrofitting coal plants with “additional pollution controls at
a fraction of the cost,” the Denver-based organization said in
a statement at the time.

Questions Due

While the Senate committee tomorrow will have a chance to
question Binz about his previous experience and how he would
lead the commission, the panel won’t vote until a later date.

Senator Joe Manchin, a Democrat from coal-intensive West
Virginia, said he has “serious concerns” with Binz’s
nomination, the trade publication E&E Daily reported Sept. 10.

In public appearances, decisions and papers, Binz has
already provided an indication of his views. His resume lists
implementation of Colorado’s Clean Air-Clean Jobs act first
among his major accomplishments on the state utility commission.

During a March conference in Washington, he praised a
National Renewable Energy Laboratory report that said 80 percent
of the U.S. energy supply could come from renewable-power
sources by 2050. He also described himself as a “fan and
supporter of” carbon capture and storage and described natural
gas as a “dead end” without it.

“By 2035 or so, we’re going to have to do better on carbon
than even natural gas will allow us to do under current
technology,” Binz said, according to an edited transcript.

“I think it’s time for a new grand bargain between
regulators and utilities,” he said. “It’s time to restructure
the bargain that regulators and utilities are operating under,
one that looks forward to these immense challenges that
technology is bringing to the industry.”